Attaining global growth and improved efficiency Toyota Motor - - PowerPoint PPT Presentation

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Attaining global growth and improved efficiency

Toyota Motor Corporation October 21, 2003

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Cautionary Statement with Respect to Forward-Looking Statements

This presentation contains forward-looking statements that reflect Toyota’s plans and expectations. These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause Toyota’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors include: (i) changes in economic conditions affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which Toyota operates; (ii) fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro and the British pound; (iii) Toyota’s ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management; (iv) changes in the laws, regulations and government policies affecting Toyota’s automotive operations, particularly laws, regulations and policies relating to environmental protection, vehicle emissions, vehicle fuel economy and vehicle safety, as well as changes in laws, regulations and government policies affecting Toyota’s other operations, including the outcome of future litigation and other legal proceedings; (v) political instability in the markets in which Toyota operates; (vi) Toyota’s ability to timely develop and achieve market acceptance of new products; and (vii) fuel shortages or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to, or difficulties in, the employment of labor in the major markets where Toyota purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect Toyota’s actual results, performance, achievements or financial position is contained in the “Operating and Financial Review and Prospects” and “Information on the Company” sections and elsewhere in Toyota’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.

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Fujio Cho

President Toyota Motor Corporation

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Part Ⅰ TOYOTA NOW

Global Manufacturing and Marketing in 2002

Part Ⅱ TOYOTA NEXT

• a. Sales Strategy – Regional Strategies:

North America, Europe, Asia, China, and Japan

• b. Building Global Development and Optimum

Production Systems

• c. Future Growth through Market Creation

Part Ⅲ Financial Strategy

Agenda

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PartⅠ TOYOTA NOW PartⅠ TOYOTA NOW

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Global Manufacturing and Marketing in 2002

Production and Sales

1,500 3,000 4,500 6,000

CY92 CY98 CY00 CY02 Projections for CY03 Overseas production Overseas sales

Number of vehicles (thousands of units) Number of vehicles (thousands of units)

* Total units including Toyota/Lexus, Daihatsu, and Hino brands

Domestic production Domestic sales

～ ～ ～ ～ ～ ～

764 764 764 2,412 2,412 1,467 1,467 1,467 2,930 2,930 1,779 1,779 1,779 3,480 3,480 2,175 2,175 2,175 3,949 3,949 2,570 2,570 2,570 4,240 4,240

6,314 6,167 6,730 6,550

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FY92 FY94 FY96 FY98 FY99 FY00 FY01 FY02 FY03

Operating income(US GAAP*2)

Global Manufacturing and Marketing in 2002

Overseas Production and Operating Income

500 1,000

(Billions of yen)

131 yen/$ 122 yen/$

(Thousands of units)

2,000

Overseas production volume (calendar year) *1 Exchange rate (yen/dollar)

*1. Output including Toyota, Daihatsu, and Hino brands *2. FY92-96 : Japan GAAP

650

2,175 1,271

～ ～ ～ ～ ～ ～

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Part Ⅱ TOYOTA NEXT Part Ⅱ TOYOTA NEXT

Attaining global growth and improved efficiency

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• a. Sales Strategy: North America

Steadily expanding sales towards the 2 million target

500 1,000 1,500 2,000

1998 1999 2000 2001 2002

Units manufactured in North America Units imported from Japan

Target for 2003–2004 Projection for 2005

Number of vehicles (thousands of units) Number of vehicles (thousands of units)

8.7 8.7 9.3 10.1 10.4 *

*

Expanding local production Expanding local production

2,000 2,000 2,000

* Market share in the US (%)

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• a. Sales Strategy: North America

Creating markets through new product launches

5 5 10 10 15 15 Passenger vehicle market Passenger vehicle market

Lexus RX330 (from March 2003) Tundra Double Cab (scheduled launch: fall 2003)

1990 1990 2002 2002

Corolla Camry

The U.S. market :

Scion

(from June 2003)

Next-generation Prius (from October 2003)

xA xB

• No. 1

in 2002 passenger vehicle sales

• No. 1

in 2002 passenger vehicle sales Number of vehicles (millions of units) Number of vehicles (millions of units)

Commercial vehicle (light truck) market Commercial vehicle (light truck) market Commercial vehicle (light truck) market

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• a. Sales Strategy: Europe

Achieving 800 thousand sales target ahead of time

Renewal of strategic core models completed

2.9% 2.9% 3.4% 3.9% 4.5%

200 400 600 800

1998 1999 2000 2001 2002 2.0 3.0 4.0 5.0

Toyota sales units Market share

Market share (%)

～ ～

Avensis Corolla Yaris European core models Target for 2005

Number of vehicles (thousands of units) Number of vehicles (thousands of units)

800 800 800

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• a. Sales Strategy: Europe

Improve products (diesel-powered vehicles)

• Expanding lineup for diesel-powered vehicles
• Expanding local production of diesel engines
• DPNR launch

100 200

1998 2001 2002

＊Diesel sales ratio

16% 22% 31%*

Diesel Engines

Rapid expansion of local production From Jan.03: TMUK 50,000 units TMMF 30,000 units From 2005: Poland 150,000 units

～ ～

DPNR/launch in 2003 DPNR： Diesel Particulate

• NOx Reduction system

Number of vehicles (thousands of units) Number of vehicles (thousands of units)

Sales units of diesel-powered vehicles

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• a. Sales Strategy: Asia

Establish a solid position as a top-brand in major markets

→ Expand faster than the market

+16% +26%

100 200 300 400

1998 1999 2000 2001 2002 10 20 30

Toyota sales units Year-on-year growth: market Year-on-year growth: Toyota Year-on-year growth (%) * excluding China

～ ～

Passenger vehicles ratio: 47% Market share: 22% Market Market share: share: 22% 22% Number of vehicles (thousands of units) Number of vehicles (thousands of units)

Projection for 2005

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• a. Sales Strategy: China

Manufacturing and marketing to be strengthened in response to market growth

2002 2003 2004 2005 2006 2007 2008 2009 2010 Establish full product lineup Establish Toyota brand Product lineup Production capacity

Daihatsu (compact) VIOS 25,000 units/Year →115,000 units/Year 50, 000 units/Year Large & luxury Luxury SUV 50,000 units/Year

Several hundred thousand units/Year

30,000 units/Year Compact

Aggressive introduction of models Aggressive introduction of models Aggressive introduction of models

Crown Corolla

Land Cruiser/Prado

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• a. Sales Strategy: Japan

Domestic market and Toyota sales

2,000 4,000

1998 1999 2000 2001 2002 20 40

Total market excluding minivehicles Toyota’s share (%)

～ ～

Toyota’s share: maintaining and expanding high-level over 40% Toyota’s share: maintaining and expanding high-level over 40%

Market share (%) Number of vehicles (thousands of units) Number of vehicles (thousands of units)

Projection for 2005

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• a. Sales Strategy: Japan

Toyota Sales by Category (excluding minivehicles)

Toyota’s share (overall) : January to September, 2003:

42.1 % (+0.1%*)

37.7 78.6

41.8 45.8 76.5

57.2

30 40 50 60 70 80

Toyota’s share: for the year 2002 Toyota’s share: January to September, 2003 Market share (%)

3 Box Large & Luxury 2 BOX Minivan, Cab Wagon

Vitz Alphard

～ ～ ～ ～

Wish Celsior Celsior

(*changes year-on-year)

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• a. Sales Strategy: Japan

Reorganization of sales channel and Lexus introduction

Toyota dealers: Luxury vehicles Toyopet dealers: Medium-sized vehicles Corolla dealers: Compact vehicles New Netz: Develop new market segment

(from spring of 2004) From August 2005, 180 dealers / 4 models

Price range Tradition Advanced /

• riginality

Future positioning

Areas to be changed

• Lexus brand: New introduction
• Toyota brand: 5 → 4 channels

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• b. Building Global Development and Optimum Production Systems

Pursue optimum product lineups by region

Region-specific models Region-specific models Core models Core models

Camry Camry Corolla Corolla Yaris/Vitz Previa/Estima Hilux Avensis Avensis Tacoma Tacoma

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• b. Building Global Development and Optimum Production Systems

Research and development system:

Global network through linkage between Japan (core technology) and regional bases (local needs)

Toyota Technical Center in the US

TMEM R&D Group

Higashifuji Technical Center

★ ★

Japan Core technology development Japan Core technology development

Development Development Collaboration Collaboration Collaboration Collaboration Collaboration Collaboration CALTY (Design Center in the US) Development Development

Development Development

ED2 (Design Center in France) Toyota Technical Center/ Design Headquarters (Head Office)

★New R&D Centers in Asia and Australia

(Thailand and Australia)

★New R&D Centers in Asia and Australia

(Thailand and Australia)

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• b. Building Global Development and Optimum Production Systems

Domestic/overseas outputs

1,779 2,570 2,175 764 1,051 1,346 1,467

1,500 3,000 4,500 6,000

1992 1994 1996 1998 2000 2002 Projection For 2003

Domestic production Overseas production

Expanding Overseas production Expanding Overseas production Expanding Overseas production

* Total output including Toyota/Lexus, Daihatsu and Hino brands * Total output including Toyota/Lexus, Daihatsu and Hino brands

6,314 6,314

Maintaining Domestic production Maintaining Domestic production Maintaining Domestic production

～ ～ ～ ～ ～ ～ ～ ～ ～ ～

UK plant Kentucky plant expansion, USA Canadian plant expansion West Virginia plant, USA Chengdu plant, China French plant Polish plant Tianjin plant, China

6,730 6,730

Indiana plant, USA

Number of vehicles (thousands of units) Number of vehicles (thousands of units)

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• b. Building Global Development and Optimum Production Systems

Strengthen production in major regions

148 148

166 166

50 50

71 71

5 5 25 25 < North America > < Europe > < China >

New factory in Texas (from 2006) Local production expansion of engines

• Start of production of TMMAL engines

(from April 2003) and capacity expansion (from 2005)

• TABC engine assembly (from 2005) etc.

＋

• Capacity expansion through the

first 3 work-shifts in the UK and French factories

• JV with PSA Peugeot (from

2005)

＋

Diesel-powered engine production at the new factory in Poland (from early 2005) Production in cooperation with China FAW Group (from the fall of 2003) (tens of thousands of units) Present Plan

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• b. Building Global Development and Optimum Production Systems

IMV Project (from 2004)

South Africa To South America To Europe / Africa

To over 80 countries and regions

Thailand: global production base Other Asian countries: Engines and main components production bases

Thailand Thailand

The Philippines Other countries India

: Pickup truck / multipurpose vehicles : Engines and main components

A network base for manufacturing and export of pickup trucks and multipurpose vehicles. Consolidating production output on a global scale and creating a mutual supply network

Argentina

South Africa / Argentina : Interregional production bases Japan Indonesia

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• b. Building Global Development and Optimum Production Systems

UMR activity (Unit and Material Manufacturing Reform)

Attain “cost reductions,” “quality improvement” & global deployment through standardization and simplification Example: Process innovation in engine development – the use of digital engineering –

Existing Process: 32 months ⇒After innovation: 16 months After innovation: 16 months

Goals :

• Lead time and costs: 50% reduction
• Quality: the world’s best

① Development ~ production preparation process ② Product structure, production facilities ③ Next-generation production method

Innovation

• 1. Synchronize product and process

designs

Product design Product design

Preparing production Preparing production Start of commercial Start of commercial manufacturing manufacturing Reduce number of Reduce number of initial initial design changes design changes Shorten lead time for Shorten lead time for production preparation production preparation Reduce the Reduce the man man-hour hour of

• f
• verseas support process
• verseas support processes

es

• 2. Verification on prototype model

line and creation of data base

• 3. Distribute 3D solid data globally

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Global-scale motorization

• c. Future Growth through Market Creation

The automobile industry still holds great growth potential The automobile industry still holds great growth potential

The U.S. market expansion Growing population The U.S. market expansion Growing population Advances in the Eastern & Central European and Russian markets Advances in the Eastern & Central European and Russian markets Strong growth

• f Asian markets

Strong growth

• f Asian markets

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• c. Future Growth through Market Creation

TECHNOLOGY DEVELOPMENT

Leading-edge technologies Leading-edge technologies Next-generation technologies Next-generation technologies Existing technologies Existing technologies

Products focused on market creation

Comfort Kindness Excitement

Nanotechnology Materials technology Biotechnology Energy technology Engine Body Electronics Transmission Chassis IT Safety Environment

MARKETING

Assessing customer needs Propose visions

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• c. Future Growth through Market Creation

Next-generation technology development : Environment

Fuel cell hybrid vehicle

Toyota FCHV

(limited marketing launched since December 2002)

Next-generation Prius and Next-generation hybrid system Achieve both superior environmental and driving performance

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• c. Future Growth through Market Creation

Next-generation technology development : Safety

Improvement of real safety performance

Passive Safety

• Earning Euro NCAP 5★（

New Avensis）

• Addressing various types of crash situations
• Use of peripheral monitoring technology

Radar /PreCrash safety system (commercialized in Japan in February 2003)

PSB Image sensor Brake Radar sensor

Active Safety

without AFS with AFS

The world's first The world's first

• Field of vision assistance
• Autonomy driving support

VSC, Navigation/Telematic etc.

• Network driving support

* AFS：Adaptive Front-lighting System

• Intelligent AFS*, etc.

The world's first The world's first

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• c. Future Growth through Market Creation

Growth potential of auto industry in the diversified society Growth potential of auto industry in the diversified society

• 3. Value: technological innovation
• Investments in a wide range of R&D
• Establish global standard
• Achieve both superior environmental and

driving performance

• 2. Competition: pursue efficiency

Optimum production and development systems Continuous cost reductions

• 1. Management: growth strategy

Speed and diversification

Market creation Adapting to the markets Sustainability

Social responsibility / building trust

Passion

Enthusiasm and conviction

Value chain

ITS / Finance, etc.

Improve customer satisfaction and realize growth

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Part Ⅲ Financial Strategy Part Ⅲ Financial Strategy

Towards a long-term, stable growth Towards a long-term, stable growth

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Ryuji Araki

Executive Vice President Toyota Motor Corporation

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Profit Earnings and Efficiency

Growth and targets in operating income ratio & ROE

5.6% 7.7% 6.1% 6% 8.2% 8.3%(1Q)

ROE

10%

(%)

9%

(%)

6 9 10 7

～ ～

500 1,000 FY99 FY00 FY01 FY02 FY03 FY04 (forecast) Target

1Q

（ ROE： 12.3%）

IF: Forex rates in FY04 = Forex rates in FY03 ＊1Q＝1st Quarter (Billions of yen)

(US GAAP)

Operating income ratio 6.8% 7.1% 9.6% 7.8% 10.4%

Operating income Operating income ratio ROE

1Q

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FY99 FY00 FY01 FY02 FY03 FY04

Unconsolidated Subsidiaries

Cost Reduction

Enhanced cost reduction effects

300

(forecast)

Billions of yen

200 100

* FY99 – FY02: Japan GAAP

(US GAAP)

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Long-term, Stable Growth

Accumulated net income and growth in EPS

2 4

FY94 FY96 FY98 FY00 FY02

20 80 140 200

Accumulated net income EPS (net income per share)

Trillions of yen * FY94 – FY97: Japan GAAP (yen/share)

(US GAAP)

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Free cash flow Dividends & share buybacks

FY99 FY00 FY01 FY02 FY03

Capital expenditures R&D

Dividend Payments & Share Buybacks

Free cash flow allocated to dividend payments and share buybacks

*1. Free cash flow = Current net income + Depreciation costs - Capital expenditures See Annex Ⅰfor a reconciliation of free cash flow to net cash provided by operating activity *2. R&D Expenses for FY99 – FY02: JAPAN GAAP

(US GAAP)

(Billions of yen)

1,000 500

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Banks

[March 31, 2003 ] [Sept. 30, 1999]

Dramatic drop

Shareholdings

by banks

Shareholdings

by banks

VS VS

Increase in foreign shareholders

(listed on NY and London Stock Exchanges in September 1999)

Increase in foreign shareholders

(listed on NY and London Stock Exchanges in September 1999)

Increase in individual shareholders

(reduction in stock unit in August 2000)

Increase in individual shareholders

(reduction in stock unit in August 2000)

Change in Share Ownership

34% 15%

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Social Contribution Program Committee Social Contribution Program Committee Corporate Ethics Committee Corporate Ethics Committee Stock Option Committee Stock Option Committee NY/London stock listing

• Disclosure based on SEC standards
• Identical information disclosure in New York,

London and Tokyo

NY/London stock listing

• Disclosure based on SEC standards
• Identical information disclosure in New York,

London and Tokyo

General shareholders’ meeting General shareholders’ meeting

International Advisory Board International Advisory Board Labor-Management Council & Forum Labor-Management Council & Forum

Board of directors Board of directors

Monitoring Monitoring Monitoring

<Monitoring>

<Internal information management>

Disclosure Committee Disclosure Committee

Accounting audits based on US & Japan auditing standards Accounting audits based on US & Japan auditing standards

Monitoring Monitoring

<Internal/external auditing>

Monitoring Monitoring Monitoring Monitoring

Monitoring Monitoring Monitoring

President Managing Officers Board of statutory auditors More than half are external auditors Board of statutory auditors More than half are external auditors

Faster operations/strengthened monitoring by various stakeholders Speedy Decision Making and Strengthened Corporate Governance

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Brand value Brand value enhancement enhancement

Motor Show Motor Show Media Media

Financial information

IR

Corporate information

PR

Technical information

CR IR Activities and Brand Value Enhancement

Investors & shareholders Investors & shareholders

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Attaining global growth and improved efficiency

Toyota Motor Corporation October 21, 2003